Caira can review your contract in 3 clicks:

• Get suggested changes and comments added directly to your file

• Generate an email summary to send to the other party

It takes less than 30 seconds to sign up for a free trial. No credit card required: Start your free trial

It’s the most common story on UK business forums:
“My business partner and I have fallen out. We own 50/50. He’s stopped working but refuses to sell. I can’t fire him. I can’t raise investment. The business is dying. What do I do?”

Or the equally painful version:
“My business partner has stopped working but refuses to resign. We are 50/50 shareholders. I’m doing all the work, he gets half the profit. How do I get him out?”

The answer, more often than not, is: Nothing.
Without a Partnership or Shareholders’ Agreement, a 50/50 split is a recipe for deadlock. Under the Partnership Act 1890 (yes, the law is that old), dissolving a partnership is messy, slow, and can destroy the business you worked so hard to build.

Friendship is not a legal structure. You need a contract for the divorce before you marry.

Who Needs to Pay Attention?

• Co-founders and startup teams

• Family businesses (siblings, spouses, cousins)

• Bands, creative collectives, and YouTube channels

• Property joint ventures and investment clubs

• Anyone doing business with a friend or relative

If you’re building something together, you need to plan for what happens if you fall out.

The Clauses That Save Relationships (or Assets)

1. The “Russian Roulette” / “Texas Shootout” Clause

The Scenario:
You and your partner are at loggerheads. You both want the business, but you own 50% each. Deadlock.

How It Works:
A “Russian Roulette” clause breaks the deadlock. Partner A offers a price to buy Partner B’s shares (say, £100k). Partner B then chooses:

• Accept the £100k and leave, OR

• Buy Partner A out for the same price (£100k).

This forces fairness—if you offer too low, you risk being bought out cheaply. If you offer too high, you overpay. It’s a quick, decisive way to resolve disputes without endless wrangling.

2. Leaver Provisions (Good Leaver vs. Bad Leaver)

The Scenario:
You start a tech company. Three months in, your co-founder gets bored and leaves to go travelling. They keep their 50% equity. You work for five years, building the value to £10m. They return to claim their £5m share for doing three months’ work.

How to Fix It:

• Shares should “vest” over time (typically four years).

• If someone leaves early (“Bad Leaver” or “Voluntary Leaver”), they lose their unvested shares or must sell them back at nominal value (e.g., £1), not market value.

• “Good Leaver” provisions (e.g., leaving due to illness) can allow for fairer treatment.

This ensures only those who stick around share in the long-term rewards.

3. The “Drag Along” Right

The Scenario:
You receive an offer to sell the company for £5m. You want to sell (owning 70%), but your minority partner (owning 30%) refuses to sign because they “don’t like the buyer.” The deal collapses because the buyer wants 100%.

How to Fix It:
A “Drag Along” clause allows the majority (e.g., >51% or >75%) to force the minority to sell their shares on the same terms. This prevents a small shareholder from holding the exit hostage and blocking a life-changing deal for everyone.

4. Reserved Matters

The Scenario:
You’re the “money partner” (30%), your partner is the “work partner.” They decide to pivot the business from selling coffee to selling crypto, without consulting you. Your investment is at risk.

How to Fix It:

• Create a list of “Reserved Matters” that require unanimous consent (or at least your specific agreement).

• Examples: Changing the business model, taking on debt over £10k, issuing new shares, or selling key assets.

This protects both partners from unilateral decisions that could sink the business.

Other Common Pitfalls

• No Deadlock Mechanism: Without a way to break a tie, you’re stuck if you disagree.

• No Vesting Schedule: Early leavers can walk away with a huge share of the business.

• No Exit Plan: If someone wants out, there’s no agreed process or price.

Why AI Contract Review Helps

Nobody wants to pay £3,000 for a shareholders’ agreement when the business has £0 revenue. So people copy-paste templates from the internet that don’t match their situation—or worse, do nothing at all.

AI contract review spots the dangers:

• “Warning: No deadlock mechanism found.”

• “Warning: No vesting schedule for founders.”

• “Warning: No drag-along rights.”

It forces you to have the awkward conversation now (“What if you leave?”) so you don’t have the catastrophic conversation later (“How do I get you out?”).

Final Thought

A business partnership is like a marriage—easy to start, hard to end. With the right agreements in place, you can protect your friendship, your business, and your future. Don’t wait for the fallout to learn this lesson the hard way.

Disclaimer: This content is for general information only and does not constitute legal, financial, or tax advice. Outcomes may vary depending on your individual circumstances.